Global shares have lost over US$20 trillion in value this year and some say the worst is not yet over. Photo / AP
Global shares have lost over US$20 trillion in value this year and some say the worst is not yet over. Photo / AP
Markets are hard to predict at the best of times, but it seems unlikely there will be a quick recovery for stocks that are having their worst year in at least three decades.
Global shares have lost more than US$20 trillion in value this year and some say the worst is not yet over based on expectations for a recession in the United States and other powerhouse economies.
Equities have come under pressure with inflation driving aggressive interest rate hikes, the unsettling war in Ukraine and now "quantitative tightening" as the US Federal Reserve and other central banks unwind their asset buying programmes.
The next test is corporate earnings season in the US, which could be another negative catalyst for equities in the coming months.
So what does all this mean for trading on the NZX?
In the latest episode of the Continuous Disclosure podcast, NZX general manager capital markets origination Sarah Minhinnick says the local market remains volatile and remains affected by macro-economic and geopolitical events.
Total value traded across the NZX in June was down 20.93 per cent from May.
"What we are seeing is a classic investment cycle ... based on what's happening in the world," Minhinnick told the podcast.
Sarah Minhinnick, NZX general manager capital markets origination. Photo / Supplied
There are many contributing factors but the big one at the moment is the really abrupt windback of quantitative easing programmes around the world, she added.
"So money is no longer flowing into assets that don't produce income and such great quantity."
While the volume of equity traded is down, June was a strong month for debt listings, with five total listings (BNZ, ASB, Infratil, and Vector), including one new green bond listing by Genesis.
Investor demand for bonds was on the rise, Minhinnick said.
"The average yield on new NZDX listed bonds is now over 5 per cent. And it would seem that investors are rebalancing their portfolios to reflect this."
Companies are also evaluating the mix of capital they are seeking to raise and there's been a surge in new debt and hybrid capital issues.
When it comes to new initial public offers though, firms are biding their time. "It's just more of that volatility factor. Typically companies will come back to the market when conditions are a little bit more predictable," Minhinnick said.
Listen to the full interview by clicking the link below.
Continuous Disclosure is a NZ Herald Podcast
Continuous Disclosure is available on IHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every second Wednesday.
